Early Warnings?

On January 28 the League of Chicago Theatres faxed a letter to its membership announcing that a longtime employee had allegedly undertaken a systematic embezzlement of league funds totaling at least $200,000. The letter, signed by executive director Marj Halperin and the executive committee of the league’s board, tried to put the best possible spin on the scandal, claiming that it had come to light “just a few weeks ago” and that the league and its members were “victims of our own success, in that the growth and overall financial health of the league” helped to hide the disappearance of funds. Interviewed for this column last month, Halperin stressed that neither she nor anyone else at the league had any suspicion of financial wrongdoing until December 30, 1999, when she immediately called in the league’s auditing firm, Pandolfi, Topolski, Weiss & Company, to go over the books.

Yet interviews with the managers of several member theaters indicate that as early as last spring the league was suffering from serious financial and administrative problems. Live Bait Theater, Lifeline Theatre, Bailiwick Repertory, and Defiant Theatre all report waiting weeks or months to be reimbursed for tickets sold at the league’s Hot Tix booths. Last June the league issued a spate of bad checks–including one to Halperin herself–though it says it has an annual budget of $5 million. And Defiant says it was invoiced by the league more than six months after receiving a canceled check for the fee in question.

Defiant joined the league last spring, attracted by the prospect of reaching a broader audience through the Hot Tix program. The league operates seven Hot Tix booths across the Chicago area where patrons can buy half-price tickets to members’ shows; each theater must contribute 24 tickets a week. According to B.F. Helman, Defiant’s box office manager, when the company was staging Bluebeard through Victory Gardens Theater during March and April, reimbursements from Hot Tix usually arrived within two weeks. But all that changed in June when Defiant opened Action Movie: The Play–The Director’s Cut at American Theater Company and was responsible for running its own box office as part of the rental agreement. The company’s first Hot Tix reimbursement check, for $53, bounced when it was deposited. Halperin says she didn’t know about Defiant’s bounced check, but Kelly Leonard, president of the league’s board of directors, says that around the same time a check issued to him by the league also bounced and he brought the matter to Halperin’s attention. Halperin now admits that a league check issued to her bounced as well, though she attributes that to cash flow problems related to the end of the league’s fiscal year in June.

Jennifer Gehr, managing director for Defiant, says that in early July she talked to the league’s bookkeeper, Shirley King, and got no immediate explanation for the bad check, though two weeks later King promised her a replacement check plus $10 to cover the bank’s service fee on the returned one. The replacement check didn’t materialize, and in fact Defiant’s Hot Tix reimbursements stopped showing up altogether. (King, who left her job at the league in January, did not return a phone call to her residence for comment.) In late July, a distressed Helman telephoned the Hot Tix operations manager, J.P. Amidei, and told him Defiant would no longer be supplying Saturday even-ing tickets to the program. According to Gehr, Defiant didn’t receive the $53 replacement check or any reimbursement for two and a half months of Action Movie tickets until mid-October, nearly 90 days after the show had closed.

Defiant wasn’t the only theater trying to get paid. Ryan La Fleur, managing director of Live Bait Theatre, says his company was typically reimbursed as much as five weeks late for tickets sold last spring, summer, and fall. He repeatedly faxed Amidei but heard nothing until he received a lump-sum check for several weeks’ worth of tickets. David Zak, artistic director of Bailiwick Repertory, describes the reimbursements last year as “erratic at best.” In September the league sent out a memo promising “a new, more responsive era for our Hot Tix bookkeeping” and attributing the delays to overhaul of the accounting systems. Signed by King and business manager Barb Netter, the memo said the league hoped to issue checks “weekly to all theaters for Hot Tix sold the previous week.” But hoping didn’t make it so. By late October, Helman was so upset about the situation that he called Halperin personally: “She asked me to give the booth another chance.” When Defiant’s next show opened in November, it again received a check for the first week and then nothing until a lump-sum payment arrived last week.

There were other problems. Last summer Defiant decided to pay the league $420 to display posters for Action Movie at three Hot Tix booths. On June 10, Gehr cut a check for the full amount and Helman personally delivered it to the league office. The canceled check indicates it was deposited on June 24 to the league’s regular checking account at American National Bank. But in mid-October a woman from the league called to ask why Defiant hadn’t paid its bill for the poster display. Helman says she called King and told her that Defiant had a canceled check to prove the bill had been paid, but since January 1 the company has received two more invoices. After all the company has been through with the league, Gehr says that Defiant is now debating whether or not to renew its membership: “It’s really been more of a hassle than anything else.”

Halperin says she knew nothing of Defiant’s predicament and promises to look into it. Because of the alleged embezzlement, she says, delays in Hot Tix payment may be inevitable now. “We are having to rebuild our ledgers from scratch, and that takes time,” she explains, adding, “the league is now operating with a deficit.”

Art accompanying story in printed newspaper (not available in this archive): photo/Jim Newberry.